SANTA ANA — An unusual sting operation ended with the indictments of 20 people--including seven physicians--accused of doctoring nearly $59,583 in bogus medical bills, Orange County Dist. Atty. Michael R. Capizzi announced Tuesday.
The 18-month probe, one of the longest in the prosecuting agency's history, involved setting up a "dummy" law firm that claimed to represent clients injured in car accidents. Doctors and employees at eight clinics in Santa Ana and one in Irvine were arrested on charges of insurance fraud, conspiracy to commit insurance fraud, and in some cases, offering kickbacks, Capizzi said.
"We put the bait over the edge of the pier and the fish bit," Capizzi said.
In one instance, the phony law firm received $3,140 in bills for 32 examinations and physical therapy sessions, but only one exam actually took place, according to the indictment.
"Insurance fraud is not just theft against insurance companies, it's a rip-off of the public in general," Capizzi said. "It affects me, it affects you, it affects everyone with higher bills."
The defendants and their attorneys could not be reached for comment. Phone messages left at the nine clinics went unreturned Tuesday.
The sting operation was unusual because investigators went so far as to rent office space and pose as a fledging personal injury law firm--right down to law diplomas hanging on the walls. Authorities said it wasn't long before clinic owners came knocking, looking for new "patients" who were actually undercover investigators.
Clinic officials sent their bills to the firm. In theory, the firm would forward payment from insurance companies back to the clinics.
Insurance fraud totals about $20 billion nationwide, said Michael L. Powell, a vice president with the nonprofit National Insurance Crime Bureau, which gave the district attorney's office $30,000 to helped underwrite the costs of the undercover investigation.
Powell praised Capizzi's investigation as "innovative" because it actively sought out the fraud, and he predicted it will become a model for law enforcement agencies elsewhere.
No money was paid out during the sting operation, and in some cases clinic workers badgered investigators for payments, Capizzi said.
The probe shows that Orange County and Southern California is a hotbed for such illegal activity, mostly because of the lagging economy, Powell said.
Capizzi said 17 of the 20 defendants have been arrested and are expected to be arraigned today in Orange County Superior Court in Santa Ana. Three defendants remain at large.
The Orange County Grand Jury handed down nine separate indictments in December and January, but the indictments were sealed until the arrests late Monday and early Tuesday.
The phony firm opened in April, 1992, and investigators randomly chose about 200 clinics in central Orange County from a phone book and offered legal services. An investigator posing as an office administrator remained on site to greet clinic administrators personally, Capizzi said.
A handful of legitimate businesses came forward. Authorities said they focused on nine clinics that submitted false bills and performed inadequate exams--when exams were performed at all.
Videotape and audiotape were used to document the operation. Authorities are now looking into other insurance bills filed by the clinics, Capizzi said.
"Obviously, we hope that it will have some therapeutic value, and someone who is inclined to commit this sort of fraud will be disinclined after learning of this operation," said Capizzi. But he said he is not "naive" enough to believe that the arrests would put an end to fraudulent insurance claims.
The California Medical Board, which handles physician licensing, said an investigation will be launched immediately into the doctors named in the indictments.
"If we don't have an investigation pending against any of the named physicians, we will begin one," said John Lancara, chief of enforcement for the medical board.
The 20 defendants and the clinics named in the indictment are:
* Dr. Rashmi Patel, 39, of Walnut, at the Pat Medical Clinic in Santa Ana; employee Silvia Sady-Kennedy, 37, of Lake Forest and administrator Manoj Patel, 44, of Walnut.
* Dr. David P. Tran, 51, of Diamond Bar, at the David P. Tran Medical Clinic in Santa Ana; and administrator Florita Interior, 48, of Irvine.
* Chiropractor Loc Bao Nguyen, 30, of Norwalk, at the Trinity Health Center in Santa Ana; Jacqueline Trinh On, 26, of Sacramento and Michelle Nicholson, 23, of Orange.
* Dr. Mohammad Fazil, 48, of Yorba Linda at Southern Physical Therapy Services in Santa Ana; administrator Nahid Sadrieh, 47, of Yorba Linda and employee Patricia Lopez, 21, of Anaheim.
* Clinic administrator Edgar Khazanovich, 35, of Mission Viejo at the Fairview Medical Associates in Santa Ana and employee Lyubov Chigirinsky, 34, of Mission Viejo.
* Dr. Boris Castillo, 54, of La Habra Heights at Clinica Latina in Santa Ana; administrator Silvia Cassiano, 48, of Valley Village and Lais Kapriss Joseph, 39, of Santa Ana.
* Dr. Norton Hering, 65, of Newport Beach at the Jefferson Medical Group in Santa Ana and administrator Jose Fermin, 40, of Laguna Niguel.
* Dr. Omar Zaki, 48, of Corona del Mar, at Irvine Multi-Specialty Clinic in Irvine.
* Dr. Sunil K.S. Gulaya, 43, of Newport Beach, with a private practice in Santa Ana.